I came across the following in an article by Chris Clugston titled On American Sustainability. If the analysis is correct, our current debate on how to fix the system is just so much hot air.
Further, and even more discouraging, is the fact that the accumulating pool of IOUs—assuming the government ultimately repays them—plus the total projected payroll tax payments by tomorrow’s workers, will fall far short of covering the total projected benefits promised to tomorrow’s expectant beneficiaries. In fact, the magnitude of our social entitlement “fiscal gap”—the present value of the total amount by which the three programs are currently underfunded—exceeded $77 trillion ($77,388) at the end of 2007— $68 trillion of which was attributable to Medicare and Medicaid. And our $77+ trillion fiscal gap increases by $2.7 trillion every year that we fail to take action to eliminate it.
To put our $77 trillion fiscal gap into perspective, our total national net worth—the difference between the total assets and total liabilities associated with all US individuals, corporations, and governments—was only $73 trillion in 2007. We could conceivably sell everything we own and still not be able to fully fund our future social entitlement obligations. Our only options for resolving our social entitlement dilemma are to increase payroll taxes by over 100%, from 15.3% to 33.3% of earnings, immediately and forever;7-14 to cut all social entitlement benefits by at least 50%, immediately and forever; to cut all non-entitlement federal government spending by 77.8%, immediately and forever;7-15 or some combination thereof.
The inescapable consequence associated with our fiscal gap is a permanent and significant reduction in purchasing power—for future program beneficiaries, future workers, or future recipients of non-entitlement federal government spending. And the future starts now, as the 78 million “baby boomers” who expect to receive social entitlement benefits far in excess of their total contributions, begin to reach retirement age.
The difference between cash receipts and cash disbursements for the Medicare Trust Fund (HI) was projected to go “cash negative” in 2008; the Social Security Trust Fund (OASDI) will go cash negative in 2017. Beginning in 2009 for Medicare and in 2018 for Social Security, the government will no longer be able to “borrow” yearly trust fund surpluses, and must actually begin to repay its IOUs to the trust funds through borrowing, taxation, or printing money. Going forward, as the actual net payout amount associated with the “big three” diverges increasingly from the projected net payout amount, purchasing power for a large portion of our population will erode continuously as entitlement benefits are reduced continuously and/or payroll taxes are increased continuously.
This may be so, but I've seen countries much poorer than the U.S. provide free healthcare that was fairly good and cheap, so I have a hard time believing that the problem is the social net itself. I suspect the real problem is the corporate monopolies on health services and the collusion between business interests and government. The problem is, of course, made much worse by the trillion dollars in direct and indirect costs that goes into the U.S. military military-industrial complex year after year. At any rate, anybody who thinks this gaping wound will disappear with a quick band-aid is delusional.
5 comments:
Once the world went off the Gold Standard, monetary policy was shaped firmly by arbitrary standards. It's a scary thought, but it also means we could have universal health care if we wanted it, but right now there's a two-pronged attack from Big Pharma and consumers who have been brainwashed into believing it wouldn't work if it was established. My fear is that we're going to have some kind of weird compromise measure that is even clunkier than single payer itself would be.
CK is correct that going off the Gold Standard meant that fiscal policy became much more arbitrary and subject to political whim, to our great detriment.
I do disagree with him on universal health care...I really would like UHC proponents to show me any place in the world where that system has worked any better than the system we presently have. The Canadian system might come closest, but it's shockingly telling that whenever they have serious medical problems, many Canadians cross the border for treatment that is either totally unavailible, or would be delivered too late to be of any use to them.
In effect, the U.S. has served as the safety net for the Canadian healthcare system. WE in the U.S. wouldn't have any such safety net. Too old and too sick? Sorry, you just aren't worth the peoples's money to save.
I do agree that medical costs ARE too high, but from my perspective, a great deal of that cost is caused by unnecessary government intervention. Free markets are ALWAYS cheaper in the long run than government controlled ones.
Here is a fact that seems not to have pierced the public consiousness. in 2006 the GAO conducted a survey that found that "if we continue to tax ourselves AT THE CURRENT RATE (averaging approximately 18% of GNP)and our discretionary spending remains static at the current rate (like polititians ever CUT spending?!?), the TOTAL income stream (including SS & Medicare taxes)into the federal government will be insufficient to pay just the INTEREST on the federal debt by 2040." -- testimony by David M. Walker, Comptroller General, US GAO, in front of the House Committee on Ways and Means on March 9, 2005
At current rates Social Security will be totally bankrupt by 2017, and Medicare will follow by 2021...Currently you pay out roughly 17% of your income to these programs, care to tell me just how much you are willing to raise that amount for UHC? Put medical care totally into the governments hands and I'm willing to bet that the costs will rise exponentionally.
Benjamin Franklin once said "When the people find that they can vote themselves money, that will herald the end of the Republic" Current events have proved his statement to be most prescient.
I'd prefer a libertarian solution to the current system if it also meant getting rid of all regulations related to healthcare. In other words, if I could buy my own drugs at the pharmacy and if someone with half a medical degree could set up shop and start his own clinic out of the basement of his house. I'd agree that something of this nature would radically reduce costs. All other tinkering is silly. Our programs are not only becoming bankrupt. We're also reaching the point where most of us won't be able to have any coverage. I make 50 grand a year in pre-tax income and am charge about $850 a month for medical and dental insurance. The cost for my tiny apartment rental, the subway to work, and parking are well over 2 grand a month. The numbers simply don't add up. In spite of the $850 I pay in insurance and the hundreds I pay every month to medicaid, I have lousy coverage and lousy healthcare, and end up fighting with the insurance companies on those rare occasions when I have the audacity to see a doctor. I say we should either go the completely libertarian route or the socialist route. Our current government-sponsored healthcare monopoly is an absolute rip-off.
It turns out that it's just another right-wing lie that millions of Canadians seek treatment in the USA because they can't get treatment in Canada on a timely basis. In fact, the study in question found that less than 15,000 Canadians sought treatment in the US because of timeliness. By far the most common reason a Canadian sought treatment in the US is because they lived closer to a U.S. hospital than to a Canadian hospital (because they lived on the border closer to a U.S. city than to a Canadian city) and their province's insurer had an agreement with that U.S. hospital to provide services to Canadians in that community.
Meanwhile, over 1,000,000 Californians seek treatment in Mexico every year because they cannot afford treatment in the USA.
Regarding how we pay for it -- money is just worthless pieces of toilet paper with pictures of dead people on it (or lumps of only slightly-less-worthless metal with pictures of dead people on them). What has value is not money, but, rather, *WHAT YOU CAN BUY WITH MONEY*. As long as the U.S. produces sufficient goods and services to meet the needs of future retirees, we can do so, regardless of whether some "fund" has money in it or not. I swear, I cannot fathom these morons who think toilet paper has any value other than what you can trade it for. You can't eat money, you can't drive a dollar bill to work in the morning, in short the only value money has is that we've agreed you can exchange it for food, a car, etc. As long as sufficient food etc. exists in the economy, we can print sufficient money in the banking system to represent the value of that food, then levy taxes to extract that food from the economy and transfer it to the retirees. Same deal for the rest of what retirees want/need. And if we suffer economic collapse so that we no longer have sufficient goods and services in the economy to cover the needs of retirees, it doesn't matter how much money is in the fund -- it won't be enough to do the job. What we should look at, in other words, is the health of the economy -- that is, whether the goods and services we are promising to the retirees will be available at the time they retire. At present, it looks like that will be true, thanks to the astounding efficiency of American workers (the hardest working and most efficient in the world according to all statistics we have on the matter, contrary to all propaganda to the contrary).
Finally, regarding the idiots who think there's any difference between gold and any other lump of metal: Gold is just a shiny metal. You can't eat it. You can't drink it. It's useless and worthless except to make jewelry, coat electronic contacts, a few things like that. I cannot fathom these gold worshippers who think a lump of yellow metal is, like, magic or something and will solve all our problems. It's utter nonsense, and the history of our nation prior to 1934 when FDR abandoned the gold standard shows it's nonsense (yes, the US was on the gold standard in 1929). What has value is the goods and services produced by the economy -- *not* some inert lump of metal.
-- Badtux the Economics Penguin
I couldn't agree more. People should also keep in mind the fact that taking gold out of the ground and refining is a very polluting process and investment in gold essentially sidelines capital that could be doing some other wonderful work in our wonderful economy. (The capital could be out digging ditches or tilling farmland, for example.)
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